Economically F'd in the A

[Wrestlevania]

I've just read this - rather frightening - article about the burgeoning Western economic implosion. I thought other Thumbs might be interested in reading it too.

It's certainly scared the living shit out of me...

[Marek]

That post sounds terribly depressing and I choose to ignore it.

Well, okay, I'm not really ignoring these kinds of opinions/predictions (in fact I've been following the blog of at least one epic doomsayer for two years), but I think it's a bad idea to let it personally influence you too much. Whenever there's a crisis there's always people who stay blindly optimistic, and people who say the sky is falling. The truth is usually in the middle.

I admit there's a distinct sense of fin de siècle in the air though, and probably rightfully so. I'm trying to be mentally prepared for anything, but I'm fundamentally positive. If there's a bubble that needs to burst, it needs to burst. Sometimes really bad shit can have a positive outcome when it becomes a catalyst for much-needed change.

Does that make any sense? I don't know what else to say (nor do I truly understand everything of the post you linked to, to be honest).

Edited January 22, 2009 by Marek

[Cigol]

(nor do I truly understand ANYTHING of the post you linked to, to be honest).

Between all the talk of bubbles, 'paper' and elephants I switched off.

[James]

My pessimism suspects he's right, but my desire for happiness and mental health desperately hopes he's wrong. I'm ignorant of pretty much all things economic, so I have no justified reason to lean with either side. My strategy is to try to be prepared for terrible things without actually thinking about them at all.

[Wrestlevania]

There's a modicum of much less pessimistic - though no less well stated - reasoning in the comments, which lightens things somewhat. I know it's probably no reason to think so, but I kind of feel that we've been in the shit (economically) before and pulled through.

Granted, things have been cock-eyed for the US and UK for a very long time now--especially with all the free money flying about to squander on non-essentials. But the only casualties so far are businesses that were either in their death throes before (like Woolworths), or companies that were operating entirely on the fact they'd whittled their margins to almost zero but had huge cash flows to soak it all up.

Having said that, there are several things I don't understand and can't get straight in my head:

Why, after all their monumental fucking about and "old boy's club" behaviour, have the most reckless, devious and conniving international banks been hurriedly bailed out by governments? And some more than once already. As best I can make of it, it's been careless lending - to facilitate careless spending - that's led us into this horrible, frightening mess. Why, then, are tax payers now fronting the cash to prop up corrupt and thoroughly broken businesses (i.e. certain banks)?

These groups clearly aren't fit to be running, and should therefore be allowed - if not actually encouraged - to die and fall out of the system. But they're not. Billions upon billions of rapidly devaluing currency are being dumped into these businesses, and I don't understand enough about economics to see how this will somehow make things better.

It just seems like we're piling more wood onto the bonfire, then hosing it with petrol for good measure until pretty much everything is gone. And that's what frightens me.

[syntheticgerbil]

Why, then, are tax payers now fronting the cash to prop up corrupt and thoroughly broken businesses (i.e. certain banks)?

I don't think the tax payers had much say in the matter. All decisions in the U.S. were made within Congress despite all of the angry calls and letters from the people who are supposed to be represented. It's such a big mess, and the census is somewhat vague among the population, but I have a feel a gratuitous amount over the majority of Americans were against a bail out of any kind, with party politics and Mr. Bush's fear mongering urgency not making much of an impact.

This is all my guess though. I certainly feel cheated. Maybe I have a really bad attitude, but I feel glad when big businesses fail, no matter who loses their jobs on the lower rung. I feel like more good can come out of the aftermath of a collapse than keeping these lame ass companies on life support.

[Roderick]

I feel like more good can come out of the aftermath of a collapse than keeping these lame ass companies on life support.

You mean quadro-spazzed on a life-glug.

[Nachimir]

John Robb is my favorite prophet of doom.

[ThunderPeel2001]

That post sounds terribly depressing and I choose to ignore it.

[James]

You mean quadro-spazzed on a life-glug.

I am expressing my approval. Watch me express it.

I've finished expressing now.

[Salka]

When I was little my mum told me about how when I was little there was an economic crisis and everyone was unemployed and it was the worst shit ever, but that turned out okay, so whatever. Deep huh?

[Wrestlevania]

My parents divorced at the same time the housing crash happened in the 90s. It was a very weird part of my life.

[Nachimir]

Mine too, separated for years while their house just went deeper and deeper into negative equity. IT was a wierd relief when the divorce finally went through.

Rusalka, I've been thinking pretty much the same thing. Things are pretty bad due to some very stupid, greedy, selfish people fucking up, but it seems unlikely that we'll struggle to eat or anything.

[Roderick]

Things are bad, and I'm no economist by a long run, but these things always go in waves. We've had a good period, now we're in the down, an in a few years it'll be good again. All we have to do is weather the storm, and it'll be good again, and maybe next time we'll be a little smarter and prepare a little better for the inevitable next fall.

[Wrestlevania]

I really want things to be alright, don't get me wrong. I've no interest in any doom-sayers being proven accurate.

I was discussing the banks with a friend earlier and he quite rightly pointed out that, were governments not to bail out banks, a great many of their citizens' assets and money would simply vanish when some of these banks shut. And with little-to-no chance of recovery even part of the money lost in such a collapse.

I also heard this morning that Obama is set to inject $850billion into the US economy within the next 30 days, as a considered recovery package that's still being carefully planned at the moment. It'll be interesting to see what that does and how it might affect the UK and other struggling economies.

[Roderick]

I'd say, convert your possibly useless money into actual, valuable goods real soon, then Once I get a little bit of cash in the next ten years, I'm going to buy a nice apple garden somewhere, so that can at least provide for some food in the event of the apocalypse, you know

[Nachimir]

Yeah :/

I was planning to start saving heavily, but right now I have no debts and the next few months are so uncertain that I see no point in anything other than living up to my means. Certainly not a good habit, but neither debt nor savings seem a very good idea right now.

The bailouts seem like pissing in the wind. The DOW and the FTSE just remain stubbornly low at around 8000 and 4000 respectively. Given the amount of virtual wealth that's going to have to be written off (banks are *still* playing hide the toxic debt), I can't see any bailout a government can afford really making a difference to confidence.

Maybe it's a good thing, an equaliser. So many developing nations are going hell for leather to reach our standard of living, and it's not really been attainable without vast amounts of debt.

[James]

When I was little my mum told me about how when I was little there was an economic crisis and everyone was unemployed and it was the worst shit ever

So, what, she said, "Right now there's an economic crisis and everyone is unemployed and it is the worst shit ever"? Because, you know, you were little and she was talking about when you were little SORRY I'M BEING A PEDANTIC DICKHOLE I'll try to avoid that in future.

Being an unimaginative sort, I can't really imagine this affecting my life much, but I guess there's a fairly significant chance that it will. I'm not exactly rolling in it, so I don't have particularly high expectations, but I did inherit some money in stocks and shares and that kind of business from my grandma, though, which was doing well for a while but is now presumably worth less than their weight in shit, which is pretty bad considering they don't actually weigh anything. I haven't actually checked, so maybe everything is OK and I have something to fall back on after all.

Nah, only joking, I'm sure they're fucked.

[brkl]

I don't know if moms explain economic crises to 5-year-olds (for example). It's quite likely her mom talked about the crisis afterwards. I had no idea my parents were financially in a pretty bad state until way later.

[Salka]

So, what, she said, "Right now there's an economic crisis and everyone is unemployed and it is the worst shit ever"? Because, you know, you were little and she was talking about when you were little SORRY I'M BEING A PEDANTIC DICKHOLE I'll try to avoid that in future.

Being an unimaginative sort, I can't really imagine this affecting my life much, but I guess there's a fairly significant chance that it will. I'm not exactly rolling in it, so I don't have particularly high expectations, but I did inherit some money in stocks and shares and that kind of business from my grandma, though, which was doing well for a while but is now presumably worth less than their weight in shit, which is pretty bad considering they don't actually weigh anything. I haven't actually checked, so maybe everything is OK and I have something to fall back on after all.

Nah, only joking, I'm sure they're fucked.

She told me about it years later in one of those typical "we gave up so much and life was so hard because we raised you kids" kind of talks. You know, how I should appreciate things more because when I was little, times were harder, blah blah blah.

Yeah I'm unemployed at the moment, I got made redundant, but oh well. I'm not going to starve. And if I do, at least I'll lose some weight and be totally slender and hot and stuff. And maybe living on the street will give me an awesome tan. You gotta be optimistic about this stuff right? Yayyy a recession, FINALLY I will be beautiful! They should put me in charge of the economy, I'll fix it with my optimism.

[James]

Destitution chic!

And like I tried to say, I knew what you meant, I was just being a prick.

[Scrobbs]

It's come out in the last few days that major overseas investors came close to removing all their money from the UK banks in october last year. There was a nearly a secret run on the banks, and nobody knew! Someone or other high up in the governmental financial circles phoned up said investors in New York and Tokyo and basically had plead with them to not do so. The headline, rather predictably in all sorts of a lather screamed, "UK 3 hours from bankruptcy!" Well that's ok, we dodged a bullet there, then.

[JoannaDark]

Destitution chic!

And like I tried to say, I knew what you meant, I was just being a prick.

irish newsrags keep referring to "recessionistas". disgusting business.

[DanJW]

Derelicte!

[Wrestlevania]

...do I want to know what he/she/it is pointing to?